Australian manufacturing is under real pressure. Input prices have risen by 37.5% since the pandemic, energy costs continue to climb, and customer payment cycles routinely stretch to 45 days or more, meaning manufacturers are often waiting on cash that is already spent.
Cash flow gaps average 56 debtor days (Grant Thornton 2024), with 45-90 days common for construction suppliers.
For manufacturers, this creates a very specific funding challenge: you need to pay for raw materials and suppliers now, before you have collected on the invoices you have already issued. Layer on top of that rising wages, higher superannuation obligations and tightening supply chains, and having the right financial solution is more important than ever.
A business line of credit offers small and medium sized manufacturing businesses a flexible working capital solution built for exactly this kind of pressure. In this article, we will explore how it works, what it can fund, and whether it is the right tool for your manufacturing business.
How does a Business Line of Credit help manufacturers?
A Business Line of Credit works in a similar way to a credit card for your business. As a revolving credit facility, your manufacturing business is pre-approved to access funds up to a set limit. Not only do you only pay interest on the funds you draw down, but you can also redraw funds within your limit once you have repaid them.
For manufacturers, this is especially useful for bridging the gap between paying for raw materials and receiving payment from customers. Nearly 80% of Australian SMEs have experienced significant cash flow challenges in the past year (ASBFEO Payment Times Report 2025), and for manufacturers, that gap between outgoing and incoming payments is often wider and more persistent than in other industries.
What are the benefits of a business line of credit?
- Draw on funds whenever you need them, including when a supplier offers a time-sensitive bulk discount
- Enjoy repayments on flexible terms
- Fund both planned ongoing expenses and unexpected costs, such as a sudden spike in energy prices or raw material costs
- Pay interest only on drawn funds, not the entire limit you are approved for
- Same-day credit decisions with funds available within 24 hours
What can a business line of credit be used for?
- Purchasing raw materials ahead of production runs
- Supplier payments, including domestic bulk orders
- Covering rising production costs such as energy and wages
- Funding staff costs during seasonal peaks in demand
- Managing cash flow gaps when customer payment terms extend beyond 30 days
- Taking advantage of expansion opportunities without waiting on outstanding invoices
What are the trade-offs of a line of credit?
There are some aspects of a line of credit that you need to take into consideration:
- A line of credit may not be the most suitable finance solution for long-term funding
- Facility limits are up to $500,000, which may not suit larger capital requirements
- Variable interest rates can affect your repayments
- A minimum drawdown of $5,000 applies for each additional withdrawal
- If your balance reaches zero, your facility remains active for three months before you need to reapply
Do you qualify for a Business Line of Credit?
What are the eligibility requirements?
To be eligible for a ScotPac business line of credit, your manufacturing business must have been trading for at least 12 months with a minimum monthly turnover of $50,000. Applicants must be 18 or older and an Australian citizen or permanent resident.
What documents do you need?
- A minimum of six months of business bank statements
- A completed application form
- Photo ID for all directors and borrowers
How much can you borrow?
Facility limits are available up to $500,000, or up to 150% of your average monthly sales.
How much does a Business Line of Credit cost?
What fees are involved?
There is a one-off establishment fee of 3% of the facility limit and a monthly administration fee of $85. There are no penalties for early payout.
How are repayments structured?
Repayments are structured as a set weekly amount covering both principal and interest, giving you predictability for cash flow planning, which is particularly valuable for manufacturers managing tight production margins.
Find the right finance solution for your manufacturing business with ScotPac
About ScotPac Australia
ScotPac stands as Australia’s largest non-bank lender, with over 35 years of experience supporting more than 9,300 SMEs through $26.3 billion in annual funding. Headquartered in Sydney, the company specialises in working capital solutions for manufacturers facing cash flow gaps that traditional banks often overlook.